IDEAS home Printed from https://ideas.repec.org/p/cge/wacage/156.html
   My bibliography  Save this paper

Walk the Line: Conflict, State Capacity and the Political Dynamics of Reform

Author

Listed:
  • Jain, Sanjay

    (Cambridge University)

  • Majumdar, Sumon

    (Queen’s University)

  • Mukand, Sharun

    (University of Warwick)

Abstract

This paper develops a dynamic framework to analyze the political sustainability of economic reforms in developing countries. First, we demonstrate that economic reforms that are proceeding successfully may run into a political impasse, with the reform’s initial success having a negative impact on its political sustainability. Second, we demonstrate that greater state capacity, to make compensatory transfers to those adversely a.ected by reform, need not always help the political sustainability of reform, but can also hinder it. Finally, we argue that in ethnically divided societies, economic reform may be completed not despite ethnic conflict, but because of it.

Suggested Citation

  • Jain, Sanjay & Majumdar, Sumon & Mukand, Sharun, 2013. "Walk the Line: Conflict, State Capacity and the Political Dynamics of Reform," CAGE Online Working Paper Series 156, Competitive Advantage in the Global Economy (CAGE).
  • Handle: RePEc:cge:wacage:156
    as

    Download full text from publisher

    File URL: http://www2.warwick.ac.uk/fac/soc/economics/research/centres/cage/manage/publications/156-2013_mukand.pdf
    Download Restriction: no

    Other versions of this item:

    References listed on IDEAS

    as
    1. Mariano Tommasi & Andres Velasco, 1996. "Where are we in the political economy of reform?," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 1(2), pages 187-238.
    2. James A. Robinson & Daron Acemoglu, 2000. "Political Losers as a Barrier to Economic Development," American Economic Review, American Economic Association, vol. 90(2), pages 126-130, May.
    3. Majumdar, Sumon & Mani, Anandi & Mukand, Sharun W., 2004. "Politics, information and the urban bias," Journal of Development Economics, Elsevier, vol. 75(1), pages 137-165, October.
    4. Alesina, Alberto & Drazen, Allan, 1991. "Why are Stabilizations Delayed," Foerder Institute for Economic Research Working Papers 275509, Tel-Aviv University > Foerder Institute for Economic Research.
    5. Arthur J. Robson & Larry Samuelson, 2009. "The Evolution of Time Preference with Aggregate Uncertainty," American Economic Review, American Economic Association, vol. 99(5), pages 1925-1953, December.
    6. Roland Bénabou & Jean Tirole, 2006. "Belief in a Just World and Redistributive Politics," The Quarterly Journal of Economics, Oxford University Press, vol. 121(2), pages 699-746.
    7. Campos, Nauro F & Horváth, Roman, 2006. "Reform Redux: Measurement, Determinants and Reversals," IZA Discussion Papers 2093, Institute for the Study of Labor (IZA).
    8. Dani Rodrik, 2008. "Goodbye Washington Consensus, Hello Washington Confusion? A Review of the World Banks Economic Growth in the 1990s: Learning from a Decade of Reform," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 55(2), pages 135-156, June.
    9. Daron Acemoglu & Martin Kaae Jensen, 2015. "Robust Comparative Statics in Large Dynamic Economies," Journal of Political Economy, University of Chicago Press, vol. 123(3), pages 587-640.
    10. Sumon Majumdar & Sharun W. Mukand, 2004. "Policy Gambles," American Economic Review, American Economic Association, vol. 94(4), pages 1207-1222, September.
    11. Werner, Alejandro M., 1999. "Building consensus for stabilizations," Journal of Development Economics, Elsevier, vol. 59(2), pages 319-336, August.
    12. Timothy Besley & Torsten Persson, 2011. "Pillars of Prosperity: The Political Economics of Development Clusters," Economics Books, Princeton University Press, edition 1, number 9624.
    13. Dewatripont, M & Roland, G, 1992. "The Virtues of Gradualism and Legitimacy in the Transition to a Market Economy," Economic Journal, Royal Economic Society, vol. 102(411), pages 291-300, March.
    14. Fernandez, Raquel & Rodrik, Dani, 1991. "Resistance to Reform: Status Quo Bias in the Presence of Individual-Specific Uncertainty," American Economic Review, American Economic Association, vol. 81(5), pages 1146-1155, December.
    15. Judd, Kenneth L., 1985. "The law of large numbers with a continuum of IID random variables," Journal of Economic Theory, Elsevier, vol. 35(1), pages 19-25, February.
    16. Baldwin, Robert E., 2008. "One Economics, Many Recipes: Globalization, Institutions, and Economic Growth by Dani Rodrik Princeton, NJ: Princeton University Press, 2007," World Trade Review, Cambridge University Press, vol. 7(03), pages 573-575, July.
    17. Rubinchik, Anna & Wang, Ruqu, 2008. "A note on redistributive fairness and economic reform," Journal of Development Economics, Elsevier, vol. 86(2), pages 447-452, June.
    18. Ghatak, Maitreesh & Mookherjee, Dilip, 2014. "Land acquisition for industrialization and compensation of displaced farmers," Journal of Development Economics, Elsevier, vol. 110(C), pages 303-312.
    19. Ricardo Hausmann & Lant Pritchett & Dani Rodrik, 2005. "Growth Accelerations," Journal of Economic Growth, Springer, vol. 10(4), pages 303-329, December.
    20. Sanjay Jain & Sharun W. Mukand, 2003. "Redistributive Promises and the Adoption of Economic Reform," American Economic Review, American Economic Association, vol. 93(1), pages 256-264, March.
    21. Dani Rodrik, 1996. "Understanding Economic Policy Reform," Journal of Economic Literature, American Economic Association, vol. 34(1), pages 9-41, March.
    22. Corneo, Giacomo & Gruner, Hans Peter, 2002. "Individual preferences for political redistribution," Journal of Public Economics, Elsevier, vol. 83(1), pages 83-107, January.
    23. Al-Najjar, Nabil I., 2004. "Aggregation and the law of large numbers in large economies," Games and Economic Behavior, Elsevier, vol. 47(1), pages 1-35, April.
    24. Timothy Besley & Stephen Coate, 1997. "An Economic Model of Representative Democracy," The Quarterly Journal of Economics, Oxford University Press, vol. 112(1), pages 85-114.
    25. Alesina, Alberto & Drazen, Allan, 1991. "Why Are Stabilizations Delayed?," American Economic Review, American Economic Association, vol. 81(5), pages 1170-1188, December.
    26. Al-Najjar, Nabil Ibraheem, 1995. "Decomposition and Characterization of Risk with a Continuum of Random Variables," Econometrica, Econometric Society, vol. 63(5), pages 1195-1224, September.
    27. Daron Acemoglu & James A. Robinson & Thierry Verdier, 2012. "Can't We All Be More Like Scandinavians? Asymmetric Growth and Institutions in an Interdependent World," NBER Working Papers 18441, National Bureau of Economic Research, Inc.
    28. H. Lehmann, 2012. "The Polish growth miracle: outcome of persistent reform efforts," Working Papers wp822, Dipartimento Scienze Economiche, Universita' di Bologna.
    29. Denisova, Irina & Eller, Markus & Frye, Timothy & Zhuravskaya, Ekaterina, 2009. "Who Wants To Revise Privatization? The Complementarity of Market Skills and Institutions," American Political Science Review, Cambridge University Press, vol. 103(02), pages 284-304, May.
    30. Acemoglu, Daron, 2003. "Why not a political Coase theorem? Social conflict, commitment, and politics," Journal of Comparative Economics, Elsevier, vol. 31(4), pages 620-652, December.
    31. Cecilia Testa, 2004. "Party Polarization and Electoral Accountability," Econometric Society 2004 Latin American Meetings 130, Econometric Society.
    32. repec:cup:apsrev:v:89:y:1995:i:04:p:856-866_09 is not listed on IDEAS
    33. Gérard Roland, 2002. "The Political Economy of Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 29-50, Winter.
    34. Yuk-fai Fong & Balázs Szentes, 2005. "Compensation For Quality Difference In A Search Model Of Money," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 46(3), pages 957-971, August.
    35. repec:cup:apsrev:v:85:y:1991:i:03:p:777-800_17 is not listed on IDEAS
    36. Joan Esteban & Debraj Ray, 2008. "On the Salience of Ethnic Conflict," American Economic Review, American Economic Association, vol. 98(5), pages 2185-2202, December.
    37. Martin J. Osborne & Al Slivinski, 1996. "A Model of Political Competition with Citizen-Candidates," The Quarterly Journal of Economics, Oxford University Press, vol. 111(1), pages 65-96.
    38. Bisin, Alberto & Verdier, Thierry, 2001. "The Economics of Cultural Transmission and the Dynamics of Preferences," Journal of Economic Theory, Elsevier, vol. 97(2), pages 298-319, April.
    39. Ashutosh Varshney, 1998. "Mass politics or elite politics? india's economic reforms in comparative perspective," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 2(4), pages 301-335.
    40. Dixit, Avinash & Londregan, John, 1995. "Redistributive Politics and Economic Efficiency," American Political Science Review, Cambridge University Press, vol. 89(04), pages 856-866, December.
    41. Edward L. Glaeser, 2005. "The Political Economy of Hatred," The Quarterly Journal of Economics, Oxford University Press, vol. 120(1), pages 45-86.
    42. Geir Asheim & Carl Claussen & Tore Nilssen, 2006. "Majority voting leads to unanimity," International Journal of Game Theory, Springer;Game Theory Society, vol. 35(1), pages 91-110, December.
    43. David Strömberg, 2004. "Mass Media Competition, Political Competition, and Public Policy," Review of Economic Studies, Oxford University Press, vol. 71(1), pages 265-284.
    44. Testa, Cecilia, 2012. "Is polarization bad?," European Economic Review, Elsevier, vol. 56(6), pages 1104-1118.
    45. Fernando Borraz & Nicolás González, 2009. "Minimum Wage: Empirical evidence for Uruguay," Documentos de trabajo 2009003, Banco Central del Uruguay.
    46. Fernando Borraz & Nicolás Gonzalez Pampillón, 2011. "Assessing the Distributive Impact of More than Doubling the Minimum Wage: The Case of Uruguay," Documentos de Trabajo (working papers) 1711, Department of Economics - dECON.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Mukand, Sharun W. & Rodrik, Dani, 2018. "The Political Economy of Ideas," The Warwick Economics Research Paper Series (TWERPS) 1163, University of Warwick, Department of Economics.
    2. Jain, Sanjay & Majumdar, Sumon, 2016. "State capacity, redistributive compensation and the political economy of economic policy reform," International Review of Economics & Finance, Elsevier, vol. 42(C), pages 462-473.
    3. Mukand, Sharun & Rodrik, Dani, 2018. "The Political Economy of Ideas: On Ideas versus Interests in Policymaking," CEPR Discussion Papers 12820, C.E.P.R. Discussion Papers.
    4. Sanjay Jain, 2017. "Worker retraining and transfer payments: The political economy of social protection," WIDER Working Paper Series 044, World Institute for Development Economic Research (UNU-WIDER).
    5. Mukand, Sharun W. & Rodrik, Dani, 2018. "The Political Economy of Ideas," CAGE Online Working Paper Series 370, Competitive Advantage in the Global Economy (CAGE).

    More about this item

    Keywords

    Economic Reform; State Capacity; Politics; Redistribution; Compensation; Ethnic Conflict;

    JEL classification:

    • D72 - Microeconomics - - Analysis of Collective Decision-Making - - - Political Processes: Rent-seeking, Lobbying, Elections, Legislatures, and Voting Behavior
    • O20 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - General
    • P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cge:wacage:156. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Jane Snape). General contact details of provider: http://edirc.repec.org/data/dewaruk.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.